 "DLF barred from accessing capital market for 3 years")
Besides Singh, son Rajiv (vice-chairman) and daughter Pia (a whole-time director) were also barred. The others prohibited from buying and selling shares, or dealing with securities in any way, were DLF Managing Director T C Goyal, former executive director (legal) Kameshwar Swarup and former MD Ramesh Sanka.
DLF had raised Rs 9,187 crore through an initial public offering (IPO) in 2007.
“...the case of active and deliberate suppression of material information to mislead and defraud securities market investors in connection with the issue of shares of DLF in its IPO is clearly made out in this case,” said the Sebi order, dated October 10.
The real estate company later issued a statement to say it and its legal advisors were reviewing the Sebi order.
"DLF wishes to reassure its investors and all stakeholders that it has not acted in contravention of law, either during its IPO or otherwise. DLF and its board were guided by and acted on the advise of eminent legal advisors, merchant bankers and audit firms while formulating the offer documents. DLF will defend itself fully against any adverse findings and measures contained in the order passed by Sebi. DLF has full faith in the judicial process and is confident of vindication of its stand in the near future,” the company said.
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The case pertains to two complaints by one Kimsuk Krishna Sinha in June 2007. Sinha had alleged that Sudipti Estates, a DLF subsidiary, was involved in a land deal that resulted in him being duped of around Rs 34 crore.
Over this issue, Sinha had moved court, which in April 2010 passed an order asking Sebi to look into the matter. DLF and Sudipti in July 2010 obtained a stay, which was subsequently revoked in July the next year.
The Sebi investigation into the matter, initiated in October 2011, found that Sudipti was earlier owned through three direct subsidiaries of DLF. Its shares were then sold to the wives of three key DLF management personnel, and the company was thus dissociated from DLF. However, the dissociation, according to the Sebi order, was a 'sham'.
Apart from Sudipti, DLF's dissociation with two other entities - Shalika Estate Developers and Felicite Builders & Construction - was also found to be a sham. Sebi said DLF had failed to make disclosures about these three companies and related party-transactions with them. According to the capital market regulator, the case filed in the matter was material information that should have been disclosed to investors at the time of DLF's IPO.
The company's directors and chief financial officer were found to have failed to ensure disclosures were fair and correct. “…all the information which were not disclosed as found hereinabove, were material information. I, therefore, find that by not disclosing material information in the prospectus and actively concealing those from prospective investors, DLF misled them...”, Sebi whole-time member Rajeev Agarwal said in the order. On Monday, the company's shares underperformed both the benchmark index and the sectoral real estate index on BSE. The stock declined 3.7 per cent from its previous close to end at Rs 146.7, compared with an 0.33 per cent gain for the Sensex and a 1.79 per cent decline for BSE Realty.
ISSUES THAT DLF HAS BEEN FACING
- Abuse of position: In May , COMPAT upheld a Rs 630-cr penalty imposed on DLF by CCI (over Gurgaon’s Belaire project)
- Little SC relief: Approached the SC against the penalty but was directed to deposit the amount, pending a final decision
- Unfair trade practices: Under CCI lens for unfair trade practices at its New Town Heights project in Gurgaon
- Debt: DLF’s debt stood at Rs 19,000 crore as at the end of June. It is now focusing only on real estate, and selling non-core assets to reduce the burden. It has sold its luxury hotel chain Aman Resorts (except in Delhi), a big land parcel in Mumbai, wind energy business and other small plots across India
- Sales slowdown: Has seen low sales in its real estate business due to an economic slump and other factors
- Jun 2007: Sebi receives complaint of non-disclosure of material information by DLF in its red-herring prospectus
- Oct 2011: Sebi orders a detailed probe into DLF’s affairs
- Nov 2012: The Delhi High Court upholds Sebi’s jurisdiction in the matter and asks for a detailed probe
- May 2013: Sebi’s probe report put up for approval
- Jun 2013: Sebi serves a showcause notice on DLF
- Oct 2014: Sebi bars DLF and six of its top executives from the capital market for 3 years